CalPERS' Harrigan: I'm Being Ousted

November 30, 2004 (PLANSPONSOR.com) - One of the
most powerful public pension officials in the nation -
California Public Employees' Retirement System (CalPERS)
president Sean Harrigan - said Monday that political and
business enemies were moving to oust him from his
post.

Harrigan told reporters that the driving force behind
the effort was CalPERS’ recent moves to use the
$177-billion fund’s muscle to pressure a wide array of
companies into adopting a menu of corporate reforms
including more closely tying executive compensation to
financial performance, the Los Angeles Times reported. As
the nation’s largest public pension system controlling the
pensions of 1.4 million state employees and retirees,
CalPERS is closely watched in the retirement services
community.

Harrigan, head of CalPERS since early 2003 (See
CalPERS Board Backs
Labor Official Harrigan for President
), is a union official who serves on the pension fund’s
board to represent the state Personnel Board. He told the
Times that a majority of his fellow Personnel Board members
would vote Wednesday to replace him at the close of his
CalPERS term early next year.

The CalPERS official said his reappointment to the
CalPERS panel was opposed by three members of the
five-member Personnel Board, which oversees the state’s
civil service system. Anne Sheehan, an official in
Schwarzenegger’s Finance Department and Democrat Maeley Tom
are expected instead to support fellow Personnel Board
member Ronald Alvarado, an appointee of former Republican
Governor Pete Wilson, according to the Times report.

‘Taking Out’ An Advocate?

In his media interview, Harrigan pointed an accusing
finger at corporate and political interests – including
Walt Disney Co. and supermarket giant Safeway Inc.- which
he said were “trying to take out one of the most outspoken
advocates on behalf of corporate governance in the
country.” Disney Vice President John Spelich called
Harrigan’s charges “utterly ridiculous.”.

In March, Harrigan and the CalPERS board were at the
forefront of a shareholder effort to remove Disney Chief
Executive Michael Eisner, who subsequently lost his post as
chairman and announced he would retire in 2006 (See
Eisner Protest Vote
Reaches 43%
). In May, the pension fund headed a less-successful effort
to oust Safeway CEO Steven Burd (See
Activist Funds Set
Governance Sights on Safeway
). Business groups such as the California Chamber of
Commerce and the California Business Roundtable accused
Harrigan and the CalPERS board of allying themselves with
supermarket unions during a 4 1/2 -month work stoppage at
Safeway and other major grocers in Southern California.

The issue became a political one Monday, when the
presidents of several unions and the heads of consumer and
retiree groups sent a letter to Personnel Board members,
urging that Harrigan be retained. “It would be
unconscionable if the (California Governor Arnold)
Schwarzenegger administration and a few narrow corporate
interests – such as the Chamber of Commerce, who have
opposed corporate reform efforts – were to use the
[Personnel Board] as a pawn in their fight against
shareholders and fundamental fairness in our national’s
financial markets,” the letter said, according to the
Times.

CalPERS Investment Committee Chairman Rob Feckner, a
longtime Harrigan ally, confirmed that Harrigan was
expected to be replaced, but vowed that CalPERS corporate
activism would continue.

Harrigan, a regional executive for the United Food and
Commercial Workers Union, has been a focal point of
criticism of CalPERS’ aggressive lobbying efforts (See
Clear
Conscience?
).
Harrigan’s critics accuse him and the CalPERS board
of spending more time going after corporations than
fulfilling their responsibility to get the best rate of
return for retirees.
“They were trying inappropriately to influence
negotiations, good-faith bargaining between unions and
their employers,” said Allan Zaremberg, the California
chamber’s president, told the Times.